It’s been a dreadful year for the BlackRock Gold & General Fund. Down 52.6% in 12 months, the value of gold companies in its portfolio has collapsed, even as the gold price soared past $1,000 an ounce earlier this year. But because “gold equities have underperformed rising gold prices, they have been de-rated”, manager Graham Birch tells Citywire. And that’s good news for investors looking to snap up a bargain.
A graduate in mining geology from Imperial College London, Birch invests in the shares of companies – mostly miners – related to gold and other precious metals. Despite the fund’s recent performance, he is the only manager to have beaten the average manager’s return in every one of the previous five years, says Citywire. And having fared badly of late, gold stocks are now at their cheapest in eight years, says Birch. Stocks such as Newcrest Mining and Kinross Corp have halved in value, while others are trading at attractive levels. Newmont Mining, for example, boasts a forward p/e of 9.7, compared with more than 25 a year ago.
And while the gold price may drop as inflation concerns ease (although they may well resurface in the longer term), “gold is a long-term story underpinned with supply and demand drivers”, Darius McDermott of Chelsea Financial Services tells The Daily Telegraph. “The best strategy is investing in a fund that has exposure to companies exploiting the asset class – BlackRock Gold & General is my preferred fund in this area.”
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BlackRock Gold & General’s top ten holdings
| Name of holding | % of assets |
| Newcrest Mining | 8.10 |
| Kinross Gold Corp | 7.60 |
| Newmont Mining Corp | 6.20 |
| Compania de Minas Buenaventura SA | 4.90 |
| Lihir Gold | 4.80 |
| Goldcorp Inc | 4.60 |
| Johnson Matthey | 4.50 |
| Barrick Gold Corp | 4.50 |
| Agnico Eagle Mines | 4.10 |
| Fresnillo Plc | 4.10 |